Every once in a while, someone in the financial world does something that makes the entire market stop and listen. When that someone is Michael Burry – the guy who made hundreds of millions betting against the housing bubble everyone else thought was invincible – you really pay attention.
Late last month, quietly and without fanfare, Burry filed papers to wind down Scion Asset Management, the hedge fund he reopened after his legendary 2008 trade. No dramatic farewell letter, no fiery interviews. Just a simple regulatory filing and a cryptic tweet: “Sometimes the only winning move is not to play.”
For most investors riding the AI rocket ship higher, that probably sounded like sour grapes. For anyone who remembers 2007, it sounded a lot more like an air-raid siren.
The Return of the Bubble Hunter
Let’s be honest – Michael Burry has never been the warm-and-fuzzy type of money manager. The man wears black hoodies to work, blasts heavy metal in the office, and once told an interviewer that having friends just isn’t his thing. He lost an eye to cancer as a toddler, later discovered he’s on the autism spectrum, and walked away from a promising medical career because picking stocks was simply more interesting.
That combination of intense focus and zero need for social approval turned out to be the perfect recipe for seeing what everyone else missed.
By 2005, while Wall Street was busy packaging garbage mortgages into AAA-rated securities and collecting fat fees, Burry was actually reading the prospectuses. Thousands of pages of fine print. What he found terrified him – and made him obscenely rich when the whole thing collapsed exactly as he predicted.
From Medical Resident to Market Legend
Picture this: it’s the year 2000. A neurology resident at Stanford is spending his rare nights off posting stock analysis on internet message boards. The picks are so good that random strangers start mailing him checks. Eventually the side hustle becomes Scion Capital (named after a fantasy novel, because of course it is).
From 2000 to 2008 the fund returned almost 489% while the S&P 500 barely moved. Investors who stuck with him through the ugly period when his subprime bets were bleeding money made life-changing returns. Burry himself pocketed around $100 million. Not bad for a guy who never really wanted to manage other people’s money in the first place.
“Only someone who has Asperger’s would read a sub-prime mortgage-bond prospectus.”
Michael Burry
He shut the original Scion down in 2008, returned capital to investors, and basically disappeared. Then, a few years later, he came back with Scion Asset Management. The comeback never quite recaptured the old magic – until very recently, anyway.
The Recent Warnings Nobody Wanted to Hear
Over the past couple of years Burry has been one of the loudest voices shouting that the AI trade looks eerily similar to previous manias. He’s sold or shorted almost everything tech-related that the crowd loves.
His most public move came when he disclosed a near-billion-dollar short position in a high-flying data-intelligence company that’s become a retail-trader darling. The CEO responded by calling him “bat-crazy” on an earnings call. The internet exploded. Memes were made. Two weeks later Burry announced he was closing the fund.
- Sold massive stakes in Chinese tech giants earlier this year – right before the rally
- Loaded up on put options against the semiconductor leader that powers the AI boom
- Went heavily into gold and started warning about “the greatest speculative bubble of all time in all things”
Most of these bets have been painful in the short term. The market keeps climbing, margin debt is at all-time highs, and anyone fighting the tape looks like a fool. Sound familiar?
Why Closing the Fund Actually Makes Perfect Sense
Here’s the part a lot of people miss: Burry isn’t closing because he suddenly got stupid. He’s closing because he’s done this before and knows exactly how ugly it gets when you’re early.
In 2005-2007 his investors screamed at him as his positions lost money for months on end while house prices kept rising. Some tried to pull their money. Others threatened lawsuits. The stress was so intense his wife worried about his health. Eventually everyone who stayed got paid, but very few people have the stomach to live through that kind of drawdown twice.
When you manage outside money, being right eventually isn’t enough. You have to be right on a timeline your investors can tolerate. And right now, almost nobody can tolerate being bearish.
“Sometimes we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is to not play.”
Michael Burry, October 2025
Translation: I see another massive bubble. Fighting it with other people’s money almost broke me last time. I’m out.
So Is This Really 2008 All Over Again?
Not exactly. The mechanics are different. Nobody is packaging AI startup term sheets into CDOs (yet). But the psychology? That feels eerily similar.
Think about it. We’ve got:
- Companies with triple-digit price-to-sales ratios being called “undervalued”
- Retail traders borrowing on margin at record levels to buy options on anything with .AI in the name
- CEOs telling investors their company is “basically an AI company now” and seeing the stock jump 20%
- Analysts projecting revenue growth that would require the entire global economy to be rebuilt around their product
I’ve been doing this long enough to know that when the story becomes more important than the numbers, we’re usually near the top.
Does that mean the market crashes tomorrow? Of course not. These things can run far longer and higher than any rational person believes possible. Just ask anyone who shorted Tesla in 2020 or Amazon in 1999.
What Burry’s Exit Actually Tells Us
The most interesting part isn’t that Burry is bearish – he’s almost always bearish. What’s different this time is that he’s willing to walk away completely rather than fight the tape with client money.
That tells me two things:
- He believes whatever comes next will be big enough to destroy funds that are positioned for it, and
- He no longer believes clients will give managers the time needed to be proven right
In other words, the level of irrational exuberance has reached a point where even someone who’s been through this before doesn’t want to manage money through it.
That’s worth paying attention to.
The Bigger Lesson for Regular Investors
Look, I’m not here to tell you to sell everything and hide in gold like Burry apparently has. But his decision should make you ask some hard questions about your own portfolio.
Are you holding positions because the story feels unstoppable, or because the price you’re paying still makes sense if growth disappoints? When was the last time you actually stress-tested your assumptions?
The best investors I know – the ones who survive multiple cycles – all share one trait: they’re willing to look stupid for a while if it means avoiding permanent loss of capital.
Right now looking stupid means having cash, owning boring companies, or – heaven forbid – thinking some of these AI valuations might be a tad rich.
Being early feels exactly like being wrong. Until suddenly it doesn’t.
Burry’s track record isn’t perfect. Far from it. But when the guy who saw 2008 coming decides the risk/reward of running money just had turned negative, maybe – just maybe – it’s worth listening.
Because sometimes the smartest trade really is the one you never make.
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